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Prepare to overreact

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  • Chinese Q1 GDP came in 0.1% higher than consensus at 7.4% yoy. Let joy be unconfined (and under no circumstances reflect on the fact that previous months were revised lower, GDP is revised everywhere all the time, or that Chinese data quality may be questioned).
  • Euro area consumer price inflation is due, at a time when markets are terrified of deflation (and economists are generally unconcerned). There is every indication of relative price changes, but no demand deficient deflation in the Euro area.
  • UK labour market data is due, with the consensus expecting a dip in the unemployment measures. The labour market numbers serve as a riposte to those who feel the UK is only a housing story. There are only so many real estate agents an economy can have.
  • US Fed President Rosengren had a rather precise formula for US rates (0% until a year away from full employment). As no one knows where full employment is, the Fed might have to raise now under these terms. More Fed speakers crowd the agenda today.

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